Sidekick maker Danger to go IPO route: Firm warns of its dependence on T-Mobile USA

Danger Inc., the “software-as-service” company that enables data and Internet services to T-Mobile USA Inc.’s Sidekick devices, will pursue an initial public offering to pay down $7.2 million in debt and raise working capital, the company said.
Danger did not disclose how much money it plans to raise or other specific terms. However, Reuters reported the company plans to raise $100 million.
Apart from its revenue derived through T-Mobile USA, Danger also makes money from devices and services in Europe and Australia using the “hiptop” brand.
For the fiscal year ending Sept. 30, Danger reported a loss of about $28 million; it lost $21 million the prior year. Revenue this year, however, reached more than $56 million from $49 million the prior year.
Indeed, at the top of the boilerplate list of risks stated in Danger’s filing with the U.S. Securities and Exchange Commission, the company noted that it has a history of net losses, which is typical of startup companies that rely on private funding. The company also noted its dependence on T-Mobile USA for the bulk of its revenue and on Sharp Corp. and Motorola Inc. for the manufacture of the signature Sidekick devices that run its services.
Danger joins a handful of other wireless companies that made IPOs this year, which included Clearwire Corp. (raised $600 million in March for network build-out and spectrum acquisition), Glu Mobile Inc. (raised $84 million in March for wireless games), MetroPCS Communications Inc. (raised more than $1 billion in April for network build-out and spectrum acquisition) and Virgin Mobile USA (raised $413 million in October for debt and payments to Sprint Nextel Corp.).